The Ugly Shoe Bubble

by Patrick Appel

The WaPo reported yesterday that the company which makes Crocs is in trouble. Rob Horning has no sympathy:

I think that it is safe to assume that Crocs might have found itself in some trouble regardless of the recession. It always amazes me that companies like this get hyped in the financial press; it seems a bit irresponsible and cynical. The unspoken subtext seems to be this: Everyone knows that eventually the trends that such companies are built on will pass, but everyone also believes that the other investors are more naive than they are and have bought into the trend unthinkingly. Everyone then wants to exploit the other’s presumed ignorance, assuming some other fool will be left holding the shares when the day of reckoning comes. And the press is there to cheer this game along, pointing to how much growth the company has seen during its peak trendiness, encouraging the extrapolation of such unsustainable figures into the future. I wonder if all the analysts who recommended Crocs a few years ago (or the ones, probably the same ones, who recommended Krispy Kreme in the late 1990s) feel any embarrassment at all.

Ezra Klein piles on.